The market for Alternative Legal Services Providers (ALSPs) has reached an estimated $28.5 billion as of 2025, buoyed by an 18% compound annual growth rate from 2021 to 2023. A new report released today by Thomson Reuters—in collaboration with the Center on Ethics and the Legal Profession at Georgetown Law and the Saïd Business School at the University of Oxford—highlights how ALSPs are reshaping the legal landscape by offering cost-efficient, tech-enabled solutions that are increasingly supplementing traditional law firm practices.

Market Growth and Key Drivers
The robust growth of the ALSP market is driven primarily by corporate legal departments’ need for flexible resourcing, efficient eDiscovery, and litigation support services. More than half (57%) of corporate law departments now rely on ALSPs for routine, high-volume tasks. In parallel, traditional law firms are also integrating ALSP models into their service delivery—particularly those firms that have established their own in-house or affiliate ALSP units. According to the report, law firms with such affiliates are much more likely to outsource work to independent ALSPs (62% vs. 23% among firms without affiliates), underscoring the value these alternative providers bring in specialized expertise and cost savings.

Generative AI as a Catalyst for Change
A significant emerging trend is the impact of generative AI (GenAI) on legal service delivery. Approximately 35% of law firm respondents and 40% of corporate legal departments have indicated that ALSPs leading in GenAI technologies are especially attractive. These advanced providers are expected to streamline processes, reduce costs, and create competitive advantages in a market that is increasingly dependent on technology. At the same time, a notable portion of respondents—about one-quarter of law firms and one-fifth of corporate departments—anticipate that as they build in-house GenAI capabilities, their long-term reliance on ALSPs may diminish. “The legal industry is undergoing significant transformation, driven by the adoption of GenAI technology,” said Laura Clayton McDonnell, president of Corporates at Thomson Reuters. “As legal departments become more sophisticated in their use of technology, they will increasingly expect their providers to deliver tech-enabled services that meet evolving needs.”

Emerging Bifurcation in the Legal Market
The report reveals an emerging bifurcation within the legal services market. On one side are forward-thinking law firms and corporate legal departments that are actively expanding their use of ALSPs—both through their own affiliate models and through independent providers. On the other side, a smaller segment remains wedded to traditional delivery methods. According to survey data, only about 5% of firms that currently do not use ALSPs plan to adopt them in the near future. This division may have significant long-term consequences: corporate law departments predict they will reduce spending with traditional providers that fail to adapt to new, technology-driven models.

Persistent Challenges
Despite the strong growth trajectory, ALSPs continue to face challenges. Confidentiality concerns have risen markedly—44% of corporate law departments now cite these issues as a barrier to ALSP adoption, up from 26% two years ago. Quality remains a perennial concern, with nearly half of respondents indicating it as a key factor in their decision-making. These issues underscore the need for ALSPs to maintain robust data security measures and consistently high service standards to build further trust with legal buyers.

Looking Ahead
The report concludes that while the ALSP market is poised for continued expansion—with new services and innovative delivery models on the horizon—traditional law firms that resist integrating technology risk falling behind. For forward-looking firms and legal departments, the “land and expand” strategy appears to be key, as they plan to increase spending on ALSPs, especially in areas such as legal managed services and tech-enabled solutions.

As the legal services landscape continues to evolve, the integration of advanced technologies like GenAI may ultimately redefine the balance between in-house capabilities and outsourced expertise. For now, ALSPs remain central to the industry's drive toward efficiency and innovation.